Stop the Steel!... tariff
(by Miklas Robbesom, student in the master programme European Law – Utrecht University, March 2025)
Trump’s recent introduction of a steel tariff may spark a transatlantic trade war with the EU. What does this mean for manufacturers and more importantly, for you?
After targeting Greenland, ‘woke’ culture and the consumption of domestic cats and dogs by illegal immigrants during his first month of presidency, Trump has now turned his attention to the EU. Within days from now, steel imported from the EU to the US will be subjected to a 25% tariff, the highest among several products affected. A similar measure had been imposed in 2018 but was later modified by the Biden administration through negotiations. Throughout his election campaign, Trump already announced reintroducing the steel tariff, claiming that ‘.’ He has been advocating a threefold narrative on the steel tariff; that the US economy will thrive; manufacturers and consumers will reap the rewards; and the EU will pay for it. This blog will first assess the veracity of this narrative for the US, and then focus on how the tariff affects the EU and its citizens.
As history has repeatedly proven, one trade tariff begets another, then another - until you've got a full-blown trade war. No one ever wins, and consumers always get screwed.
How is the US economy affected by the tariff?
Increased price of domestic steel
The US traditionally has a high demand for steel due to their large defense industry, construction and infrastructure projects. Currently, around 77% of steel used in the US is domestically produced, while . When tariffs are applied, the cost of imported steel increases significantly, leading to additional manufacturing costs. However, the overall demand for steel in the US remains steady. As a result, buyers will be incentivized to buy cheaper, domestically produced steel. This surge in demand for domestic steel will exceed the supply that U.S. manufacturers currently can produce. When demand is greater than supply, domestic steel manufacturers are expected to raise their prices to balance the market, leading to higher costs for steel within the entire supply chain. These costs will ultimately be passed on to the consumers who pay the price for the tariff.
Job cuts in the steel market
However, the increased demand will bring , meaning factories that produce raw materials, such as steel tubes or wire. However, the price to pay for this benefit is great. The market of steel production is a lot smaller than that of steel products. With increased prices of raw steel, product manufacturers have to cut down on personnel and payroll. Study shows that the tariff imposed during Trump’s first election in 2018 resulted in a in the entire steel industry within a year. The upcoming tariff will likely follow a similar pattern. So, the prospect for American consumers and employees is not as rosy as Trump alleges.
How is the EU economy affected by the tariff on steel?
Reduced export to the US
In the last few years, the US was the 2nd largest purchaser of EU steel, importing 2,2 tonnes of steel in 2024, amounting to roughly . A tariff would reduce the export of steel to the US, as it would deter American manufacturers from buying more expensive EU steel. As a result, the EU’s steel market will shrink, prompting the search for alternative trade partners to soften the blow.
Decline in employment
The steel industry is the third-largest job provider in the EU, . Additionally, rely on the steel market’s performance in some way. The decreased demand for European steel caused by the tariff will result in a decline in employment throughout the Union.
Decreased investments and innovation
The implementation of a tariff results in short term and long term insecurity for all parties involved. Private entities invested a lot less in European steel-heavy industries after Trump’s announcement of the tariff, causing . Additionally, large manufacturers will likely refrain from making any large investments, as their future remains uncertain. Since the steel industry is a , cutting investment in innovation means progress toward more sustainable solutions slows down. This demonstrates that the tariff does not just affect the economy; it also indirectly contributes to climate change by delaying the efforts towards a greener future.
Retaliatory tariffs
So far, this blog has only discussed what the steel tariff in itself would mean for the EU and US economy. However, the EU will not tolerate these offences without adequate repercussions. Brussels announced a response in the form of s on the US. In addition to steel, these retaliatory tariffs will most likely target industries that US exporters in republican-voting states heavily rely on, such as . Another possibility is to impose tariffs on the dominant . Unfortunately, such retaliations may backfire for the EU in a similar manner as discussed for the US in the sections above.
How does the tariff affect you?
The tariff will be especially harmful to the EU’s , which includes car manufacturers, construction companies and machinery suppliers. The revenue losses that these industries will incur due to a shrinking market and reduced investments, will likely be passed on from businesses to consumers. This is especially harmful to the housing market, which is in most EU Member States. The increased price of steel building materials will drive up the expenses for construction companies, resulting in even higher prices of newly built homes. Additionally, the price of other steel-heavy products, ranging from cars, public transport and household appliances to more everyday items such as canned food and drinks will increase, resulting in a general decline of purchasing power for consumers within the EU.
Furthermore, the tariff will likely result in thousands of EU citizens losing their jobs. Steel factories and manufacturers might close down or relocate to other parts of the world. This reduction in employment is not just limited to the industrial sector; jobs will also be affected. If car manufacturers have less available jobs, this effect will cascade down to a reduction in the number of employees needed at your local car dealership, for instance. Additionally, the industries that retaliatory tariffs target will most likely also see their employment shrink.
So, is Trump steeling the EU economy?
This blog post has made apparent that Trump’s threefold narrative is largely inaccurate. While the steel tariff undeniably has negative consequences for the EU, the narrative that it would benefit the US and its businesses and consumers is ‘fake news’. Instead the tariff pulls a transatlantic steel curtain over trade relations with the US. Brussels could attempt to divert their steel market towards more reliable trade partners - and they might not have to look far. After a Canada-EU leaders’ meeting in February, rumors have sparked about after facing the same steel tariff. Perhaps this could positively change the narrative for the EU's future.